US City Named 'Pirate Capital' of the Music World

Gainesville, Fla., the home of botanical gardens, a museum of natural history and one of the oldest universities in the state. But according to the latest global music piracy report, it can now add to its reputation the more ignominious title of music “pirate capital” of the world.

The dubious award for Gainesville, is detailed in a global report into music piracy — the Digital Music Index (DMI) — by global analysts at MusicMetric which charts digital music trends around the world.

Investigating file-sharing activity carried out via the peer-to-peer protocol BitTorrent, the inaugural report published by the group shows that Americans downloaded 759 million songs illegally using BitTorrent downloading software in the first half of 2012.

While not all the music available on BitTorrent is unauthorized, the majority of songs delivered through the system are unlicensed, the report explains, and the U.S. still tops the list of the greatest music piracy users and abusers.

Gregory Mead, global CEO of Musicmetric, said that the detailed analysis provided by the report could help offer the music industry an insight into what consumers want.

“Detailed data analysis is of great value to the industry and just as retailers need to know their customers, we need to do the same online,” he said. “Offering people better insight into music through the DMI will help the industry begin to reclaim its past glories and we’re excited about working with labels to achieve this.”

The DMI found that unlicensed file-sharing decreased slightly over the past six months in territories where services such as Spotify and Pandora Media were available.

Meanwhile, the previous market-leader MySpace, has now been overtaken by as the site with the most streams for new and breaking acts. Google’s YouTube is the most popular website for listening to music online, with 33.5 billion plays in the last 12 months.

Americans downloaded more than 97 million albums and singles using BitTorrent up to June 2012 with Gainesville accounting for the top metro area for illegal downloads per capita in the U.S., followed by Albany, Ga., Fairbanks, Ala., Lexington, Ky., and Tallahassee, Fla.

“America has millions of passionate music fans — and while we don’t condone any kind of piracy — the Digital Music Index provides a detailed snapshot of the scale of file-sharing, as well as licensed music consumption," Mead said.

The U.K. is the second-worst offender for music piracy after the U.S., with more than 33 million music albums and 10 million singles illegally downloaded by Brits.

Manchester emerged as the piracy capital of the country, followed by other big university cities Nottingham and Southampton in third place. MusicMetric said that in the U.K., the “typical” music pirate was a fan of the singer-songwriter Ed Sheeran and lived in Manchester.

Combating Piracy

Mead from MusicMetric told CNBC that piracy would slow as legal streaming services increased in established and emerging markets.

“Piracy is slowing in the places that have legal and low-cost streaming services and a low-barrier-to-entry access to services,” he said. “Piracy is slowing in places like Britain and the U.S. [where these services are growing] but for example, in Brazil [where these services are still not widespread] piracy is growing.”

“The global music industry has continued to expand online and the period 2011-2012 saw healthy growth in sales of digital music,” Musicmetric’s report states.

Global digital revenue of record companies has grown by 8 percent in 2011 to an estimated $5.2 billion, compared to 5 percent growth and revenues of $4.8 billion in 2010, according to the IFPI.

Ben McEwan, director of digital licensing at PRS for Music, a performing rights society that represents (and collects copyright revenues for) 90,000 composers, songwriters, and music publishers in the U.K., told CNBC that governments must give the music industry more support to combat piracy.

“We need action against piracy. Action taken to ensure the legitimate industry is supported and that licensing is made as simple as possible,” McEwen said, adding that the music industry has to keep up with consumer trends and, by doing so, may beat piracy.

“There’s a big transition going on, bricks-and-mortar music stores are closing down and there is a whole younger generation of people that have grown up doing things digitally,” he said. “The issue for the industry is that though digital is growing, it’s not growing fast enough to make up for the decline in physical music revenues. ... We need to manage this transition to digital and make sure newer models and services that are evolving now, are working.”

Daniel Savage, MusicMetrics’s Los Angeles-based head of operations, said that the challenge for copyright holders is to find ways to monetize music files torrented online.

“The potential for converting revenue lost through file trading is huge but to tap into it, we need clarity on the drivers between social media, file sharing and all the other activity an artist can do,” he said.